Digital future

September 30, 2009

Australia's game development community were told yesterday that digital distribution will represent the "vast majority" of game sales in the next generation of consoles.

The bold claim was made by David Edery, former worldwide games portfolio manager of Xbox Live Arcade for Microsoft, who delivered the keynote address at Film Victoria's Digital Distribution Summit: Small Games, Big Market held at Melbourne's Federation Square.

"These ecosystems are going to be the future," Mr Edery says.

But Mr Edery, who is now an independent games consultant focusing on digitally-distributed games, also provided something of a reality check for developers expecting huge success overnight from releasing games online.

He confirmed Screen Play's exclusive story published in July that it was now extremely difficult for independent developers to get a game published on the Xbox Live Arcade service.

And Mr Edery says that while Arcade is the most successful console digital distribution platform, only 18 per cent of Gold Xbox Live subscribers download content regularly (even free content). The figure for PlayStation 3 users on PlayStation Network is only 10 per cent.

The reality is that many consoles are never connected online. "The market is smaller than a lot of us would like at this time," says Mr Edery.

Another reality check for developers is that despite the democratic nature of online networks like the iPhone's App Store where the barrier for entry is very low, the market is even more hit driven than ever before.

The amount of titles available via digital distribution is only amplifying the trend towards hit titles.

"The idea that hits are going away because of the 'long tail' is nonsense," says Mr Edery, who used the examples of music sales on iTunes continuing to look like traditional Billboard charts, and also book sales on the vast catalog of Amazon still focused on "hit" content (75 per cent of Amazon book sales in 2006 were from just 2.7 per cent of titles).

Mr Edery says success is now even more concentrated in the top titles. The hits are just getting bigger and independent developers are now actually losing market share to the major labels as larger publishers move into digital distribution.

Fortunately, Mr Edery says the digital distribution market is growing rapidly, and diverse success stories like Battlefield 1943's one million-plus sales and the 300,000-plus sales of Trials HD in just their opening few weeks on sale showed the potential.

Mr Edery says digital distribution provides the opportunity to experiment and innovate in a way that is "simply not possible" in the retail sector, a theme reiterated by many other speakers during the day-long summit.

"This is an incredible time in the console space", Mr Edery says. Games developers today have a rare opportunity to innovate, and he says it excites him to see so many highly creative games that have been successful. "They wouldn't have had a chance a few years ago and might not have a chance in a few years from now".

Other speakers at the Digital Distribution Summit included chairman of the Independent Games Festival Simon Carless, who provided advice for developers about how to market online games and some illuminating "guestimates" of the sales of games on networks such as Xbox Live Arcade, PlayStation Network, WiiWare and the App Store.

Meanwhile, Firemint CEO Rob Murray shared his thoughts on what helped make Flight Control such an astonishing success on the App Store, and Halfbrick CEO Shainiel Deo explained his studio's transition to digital distribution as the company prepares for the release of Raskulls next year on Xbox Live Arcade as well as four games for Sony's new PSP Minis range.

On the final panel session of the day, Krome Studios boss Rob Walsh provided one of the most brutally realistic assessments of the current state of the market in a week that sees the release of Sony's PSPgo.

"The Wallmarts of the world are not going to give up this market without a fight," Mr Walsh says, noting that "what happens in the middle" before digital distribution replaces retail is going to be the source of continuing angst between traditional publishers and retail, as evidenced by the challenge Sony is currently facing getting the PSPgo supported by traditional retailers like EB Games.

Opening the summit yesterday, Film Victoria CEO Sandra Sdraulig announced a new $500,000 funding program for downloadable games to support the local game development industry.

Victorian developers can now apply for up to $75,000 to help fund a prototype for a downloadable game, and top-up funding is also available for titles that successfully obtain a distribution deal to help complete production.

"The new Downloadable Games Initiative will see Film Victoria invest more than half a million dollars to support five new projects in the next 12 months," Ms Sdraulig says.

"With the Australian game industry expected to increase from $1.5 billion to $2.2 billion in 2013, digital distribution presents significant new business opportunities to local game companies. Our aim is to support and inspire the local industry to take advantage of this burgeoning market."

Ms Sdraulig says Film Victoria supported 12 digital media prototypes last financial year with a total of $4.7 million.

"But it’s not just funding that provides critical support to the industry, opportunities for networking and education are also paramount hence why we’ve created today’s event," she says.

"The Digital Distribution Summit is a rare opportunity for the gaming community to explore international growth and trends, and for a select number of developers to present their projects in one-on-one workshops and ask questions of the most influential practitioners in their field. This is a true meeting-of-the-minds and we look forward to seeing the future gains to the national and local industry resulting from the summit."

Videos of presentations of the summit will be posted in the next few days at ddsummit.com.

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Recent comments

Digital distribution will be another thing Microsoft is looking forward to stuffing up.

singo the dingo

September 30, 2009

09:02 AM

Does anyone remember the first flush of the Internet boom when people predicted that online shopping would crush bricks and mortar stores?

Didn't believe it then and don't believe it now. People like the social experience of congregating in large shopping spaces and while digital distribution will always have a niche (even a growing niche), it's unlikely to replace that.

Resistance from gaming shops, that surely make far more money from game sales than hardware has to be a big factor here as well.

Unless digital distribution makes content significantly cheaper or opens up new types of gaming that just can't be made available otherwise (which would be great, by the by), this is just another empty attention grabbing boast.

Gill Bates

September 30, 2009

09:12 AM

@ Bill Gates

What a relevant post! Stuff up how exactly? Like the way Sony stuffed up everything they have touched this generation? Xbox live is perfect, the downloads have been flawless since day one, the 360 trumps everything else for games and ease of use and we didn't get dicked on price like you did.

I challenge you to reply with your fanboi rant so I can make you look even more of an idiot than you currently look.

Mongey

September 30, 2009

09:18 AM

I for one would be perectly happy to download every game I buy from now on . The boxes and CDs make a mess in my lounge room, I dont think I have ever read a manual.My internet download usage can take a hit for a game a month or whatever
the problem is HDD space

If MS want download content to be the future let me plug in my 1tb external drive into the bloody xbox usb ports that are already there and use it for storage . I will never pay what they are asking for the 120gb model. And 120gb is far too small to keep all your games on anyway .Even if I had to reformat it for exclusive xbox use I wouldnt care .

That's what holding me back from digital distribution otehr than a few XBLA games here and there

TMB

September 30, 2009

09:20 AM

I can't stand Digital Distribution. As games get more complex, and therefore take up more space, they take longer to download, and also take up a massive chunk of my download limit!
Whats the point in downloading a multiplayer game, only to get shaped and not be able to play it?
Grrr.
Aggravating.

Also, with Digital Distribution, there will never be the casual sales that shops get. Just walking around and killing time in a games shop, seeing something you like and buying it must be a massive part of their business. So it's not as lucrative for the shops, AND the customers aren't exposed to as many games. I just don't see how its better at all.

Zahrah

September 30, 2009

09:23 AM

I have been looking at Aion, because to download, with consideration for our dollar is almost half the cost to download then it is to buy, and that again depends on the retailer - as much of a $30 difference between stores.

We will also need Isp's to come to the table with better gig /price allowances though to allow the downloads to work well.

Tim S

September 30, 2009

09:28 AM

Digital distribution in the current environment is perhaps a half-measure. Perhaps if and when distributed computing becomes more prevalent as a consumer standard, it will make more sense as we will move away from a boxed-product model to a hosted/licensing model. I know that's a long way off, but there are a lot of corners of the computing industry at large already moving towards this model.

Two of the most significant barriers are of-course consumer resistance and infrastructure, however it may be inevitable that as our technologies improve, distributed computing may start to make sense.

While I like many love the boxed/retail and owner-hardware/processor-load model of software ownership and distribution, eventually convenience may win out when the to-user pricing crosses the competitive threshold and the hardware reaches a solid, workable competency.

death to nerds

September 30, 2009

10:29 AM

Next gen consoles to have downloads make up the majority of game sales?

/Nelson
HaHa.
/Nelson

Butch Walker

September 30, 2009

10:30 AM

I have to say that I'm opposed to the idea.

Firstly, I like to have something tangible when I pay for a game. I like to read the hype while I'm at work anticipating getting home to load it up.

Secondly, my OCD-esque behaviour when it comes to HDD's wont allow me to keep games on there that I'm not currently playing but part of me still wants those games on there in case I feel like playing them at some stage.

Lastly, I'd like to choose which games I install to my HDD since space is at such a ludicrous premium.

Darryn

September 30, 2009

10:47 AM

This topic has been covered extensively previous to this article, so I feel I have nothing more to add except to re-iterate the discussion points previously raised.

Its better for publishers, 'platform holders' & even potentially developers... however its not a good deal for retail, therefore it will meet stiff resistance and have a very slow adoption rate amongst both the product makers & the consumers.

I do most of my purchasing for PC games from steam these days, its a conduit that makes sense for the platform... however for console games I am much more hesitant & pessimistic, part of that reasoning coming from the collectors mindset of shelf-display uniformity that I do so enjoy.

I think retail product is in for the long haul still, but the continuing success of this generations consoles in staving off a hardware leap requirement as time goes on will continue to raise these sorts of speculations about the 'next generation'.

TC

September 30, 2009

12:18 PM

I absolutely love digital distribution and it's the main reason I upgraded my PS3 drive to 320gb. If I could do away with packaging and having to visit stores I would.

I'm looking forward to more hit games being available for download - I'm still waiting for GTAIV and probably will be for while. Burnout Paradise is an awesome download though and just about halves most of the loading times.

In terms of browsing, I look on PSN at least once a week and download any demo I like the look of (yes, I have a great download speeds and and a high limit).

I recently bought Supersonic Acrobatic Rocket-Powered Battle Cars because the demo looked interesting and once I tried it I liked it... a price tag of $15.95 helped too. If you haven't seen it, check out the demo - think soccer with remote controlled cars, lots of speed and decent controls.

Joka

September 30, 2009

12:35 PM

@ Butch Walker
100% agree there. Sure I don't mind the occasional download if it's a small game, but I still like to get games with the manuals etc. Part of my collecting days, plus I like to keep things in good nick too. As for PC gaming, lost touch with that some time ago. DD for me is pointless.

Smoolander

September 30, 2009

01:50 PM

I don't mind downloads, however they offer absolutely nothing in terms of competitive pricing (steam excepted which is competing with bricks and mortar).

If you just had a single point of download for digital content for a console PC etc, then it would be highly unlikely there would be any incentive to discount the cost of games when there is no competition.

Digital distribution should reduce the cost of the game, because of many factors, but companies will still find some pathetic excuse to pass off the cost of a digital game the same as what a retail version would have cost - 'Oh, this year is bad for solar flares which means the cost of downloading content is higher which means we have to charge you a higher amount'.

Or in some cases there will not even be a pathetic excuse, just a higher price point - looking fairly and squarely at you Microsoft Australia for the disgraceful pricing of Mass Effect on Games on Demand.

Digital distribution by itself = companies finding more ways to rip you off than they can currently state

Smoolander

September 30, 2009

01:52 PM

Off topic

zavvi.co.uk currently have Mirror's Edge for the 360 for approx $19 before shipping cost.

xavier

September 30, 2009

02:53 PM

Hey - you guys seen the Pirate Party is forming in Australia for the next election? Link is:

This is great stuff! Now we'll really see the influence of gamers in the electorate...

Nikki Sixx

September 30, 2009

03:08 PM

This is Sony's whole underhanded idea. Don't forget that they are the ones who shut down Lik-Sang, remember? M$ didn't care that we imported games but Sony couldn't stand not ripping Aussies off so they sued and closed them down.... why? Because Lik-Sang were selling legitimate games at the overseas prices.

Blake

September 30, 2009

04:12 PM

While digital distribution certainly sounds like a good option, there's still a great many of us whose internet is simply to slow that it becomes unfeasible.
Additionally for those who can download games, it could very quickly eat up their download cap.
If Microsoft, Sony and Nintendo make deals with all our ISPs to offer us unmetered downloads, then maybe it'll have a chance of claiming a bit of the retail share

DexX

September 30, 2009

04:25 PM

My worry is market monopoly leading to artificially high prices.

If Sony is the only one selling products for the PSPgo and you can't buy games from anyone else, where's the competition? Where's the impetus to keep prices reasonable?

Steam is okay, because nobody controls the PC platform and anyone can develop for it and set up their own rival retail system.

Nobody can compete with PSN, though (or XBLA, or App Store). Why not gouge customers when nobody can undercut you?

Mr Ak

September 30, 2009

10:57 PM

@ DexX

True, but I'm thinking the same could be said of retail games now. A closed console and approval structure means that the manufacturers can presumably dictate terms for most of the content.

I'm really only guessing there, but an open console would be neat, wouldn't it?

WadeMcG

September 30, 2009

10:58 PM

Look at the prices of Oblivion and Bioshock through XBox on demand, and then look at their prices at just about anyone other than EBGames (and that's before you consider the two pack). The digital ripoff is already happening.

death to nerds

October 01, 2009

06:55 AM

@DexX - 'Nobody can compete with PSN, though or XBLA'

I would actually say that there is competition with these services from the bricks and mortar stores. Marvel vs Capcom may cost $23 but you can pick up a game for that (if you shop hard enough).

If you have not other option then we all really are screwed (and not in a good way).

Dizza

October 01, 2009

10:11 AM

Your all forgetting one thing, what happens to a downloaded game when your done with it???? There is a chance you may never play it again. At least with having the game on disk you can sell it or trade it in for that shiny new game.

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